FDA – All About Advertising Lawhttps://www.allaboutadvertisinglaw.com
Regulatory & Litigation Developments for Advertisers and MarketersThu, 16 May 2019 20:41:53 +0000en-UShourly1https://wordpress.org/?v=4.9.10Ninth Circuit Affirms FDA Preemption in Tossing Vitamin E Supplement Casehttps://www.allaboutadvertisinglaw.com/2019/02/ninth-circuit-affirms-fda-preemption-in-tossing-vitamin-e-supplement-case.html
Wed, 27 Feb 2019 18:02:12 +0000https://www.allaboutadvertisinglaw.com/?p=5144Continue Reading]]>There is no denying that, at times, the express claims made on dietary supplement labels may seem to convey a broader implied claim to the consumer regarding the supplement’s performance benefits. While that may be true, last month the Ninth Circuit confirmed that plaintiffs cannot successfully allege that a lawful “structure/function” claim misleadingly implies that a dietary supplement will treat, cure, or prevent a disease under state law. In so deciding, the court found that Section 403(r)(6) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) expressly permits dietary supplements to make claims that describe the role of a nutrient or dietary ingredient intended to affect the structure or function of the body (i.e., structure/function); and that Section 403A(a)(5) of the FDCA expressly preempts any California law that would differ from the FDCA’s allowance for structure/function claims.

While perhaps not surprising that the court reached this conclusion, a recent Ninth Circuit opinion is worth noting because it is the first time that the court has issued an opinion expressly confirming that lawful structure/function claims will have coverage against California’s strong consumer protection laws. We caution, however, that dietary supplement manufacturers may still face liability under state law if they fail to disclose material information about their products, including its safety profile.

The plaintiff alleged that the defendant’s Vitamin E supplement claims to “support cardiovascular health” and “promote[ ] immune function” were false and misleading in violation of California law because the Vitamin E supplements (1) did not prevent “cardiovascular disease” and (2) might increase the risk of all-cause mortality. The Ninth Circuit disagreed and affirmed the district court’s grant of summary judgment in favor of the defendant.

In evaluating the plaintiff’s claim that the defendant misleadingly advertised its Vitamin E supplement as preventing cardiovascular disease based on the product’s claims to “support cardiovascular health,” “heart health,” and “circulatory health,” the Ninth Circuit went back to basics to discuss the critical distinction in the FDCA between “structure/function claims” and “disease claims.” The former are expressly permitted for dietary supplements under Section 403(r)(6) of the FDCA, while the latter class of disease claims (i.e., claims to diagnose, prevent, treat or cure a specific disease or class of diseases) cannot be lawfully made for dietary supplements—and would render the product an unapproved new drug. The court took note of FDA’s 2001 structure/function rule which identifies the phrase “helps maintain cardiovascular function and a healthy circulatory system” as a permissible structure/function claim.

The court turned next to the issue of federal preemption. Despite the plaintiff’s argument that it did not matter whether the defendant’s claims were structure/function claims or disease claims because such claims were allegedly false and misleading, the court explained “to the contrary, it matters very much.” Specifically, the FDCA expressly (1) allows for structure/function claims and (2) preempts any state law “requirement respecting any claim of the type described in section 343(r)(1) of this title made in the label or labeling of food that is not identical to the requirement of section 343(r) of this title.” 21 U.S.C. § 343-1(a)(5). Accordingly, if the plaintiff were to successfully challenge a structure/function claim as an implied unlawful disease claim, doing so would undermine the FDCA’s clear distinction between structure/function and disease claims.

Applying the preemption provision to the defendant’s product claims, the court found the plaintiff’s claims concerning the Vitamin E supplement’s effects on cardiovascular health were preempted because he sought to “impose a requirement under California law that structure/function claims—at least those related to cardiovascular, circulatory, and heart health—made on a supplement’s label require proof that the supplement treats or prevents cardiovascular disease.” With regard to the “immune support” claims, however, the court did not preempt such allegations because the plaintiff’s claim turned on whether the defendant failed to disclose any material fact.

Specifically, the plaintiff challenged the Vitamin E supplement’s claim to “promote[ ] immune function” as false and misleading on the grounds that the defendant allegedly failed to disclose that Vitamin E may increase the risk of death. The Ninth Circuit noted that California’s labeling laws mirror the FDCA with respect to the provision that a food label “shall be deemed to be misleading if it fails to reveal facts” that are “[m]aterial with respect to consequences which may result from use of the article.” 21 C.F.R. § 1.21(a)(2). Because California’s law does not differ from federal law, the plaintiff’s state law claim was not preempted.

Reviewing the merits of the plaintiff’s allegation, however, the court found that the plaintiff did not provide sufficient evidence that vitamin E supplements are actually harmful. To that end, because the plaintiff failed to meet his burden to create a genuine issue of material fact as to whether the defendant’s immune-health structure/function claim was misleading, the Ninth Circuit dismissed the claim and affirmed summary judgment in favor of the defendant.

This decision provides important protection to dietary supplement manufacturers making structure/function claims. How much the ruling deters the plaintiffs’ bar remains to be seen.

]]>FTC and FDA Issue Warning Letters to Supplements Companieshttps://www.allaboutadvertisinglaw.com/2019/02/ftc-and-fda-issue-warning-letters-to-supplements-companies.html
Thu, 14 Feb 2019 15:09:35 +0000https://www.allaboutadvertisinglaw.com/?p=5133Continue Reading]]>Earlier this week, the FTC and the FDA announced a joint effort to combat unsubstantiated health claims in the supplement space. In three warning letters—to Gold Crown Natural Products, TEK Naturals, and Pure Nootropics, LLC (collectively, the “Companies”)—the agencies explain that certain efficacy claims may lack competent and reliable scientific evidence for support. Specifically, the Companies’ claims pertain to treating Alzheimer’s and remediating or curing other serious illnesses, including Parkinson’s, heart disease, and cancer. The FDA issued the letters the same week it announced an effort to modernize its oversight over dietary supplement products. Taken together, these two actions reinforce that the agency appears to be trying to differentiate participants in the supplement space.

The letters warned that the companies were making drug claims in violation of Section 201(g)(1)(B) of the FD&C Act and unsubstantiated disease claims under Section 12 of the FTC Act. Under the FTC Act, it is unlawful to make health claims that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to substantiate such claims. This standard can also entail a need for well-controlled human clinical studies. With respect to its review of the Companies’ websites and social media accounts, the FTC pointed to a number of exemplary claims that likely require substantiation. However, the FTC made clear that the examples are not exhaustive, urging the Companies to thoroughly review all claims and ensure they have adequate substantiation.

The agencies gave the Companies fifteen days to notify the FTC and FDA of the specific actions the companies will take to address the concerns outlined in the warning letters. Absent curative action, enforcement action is likely. Similar actions against other companies may be in the wings. Stay tuned.

]]>CBD Update: The FDA Commissioner Cannot Ignore the Buzz – But Is Further Deregulation on the Horizon?https://www.allaboutadvertisinglaw.com/2019/01/cbd-update-the-fda-commissioner-cannot-ignore-the-buzz-but-is-further-deregulation-on-the-horizon.html
Wed, 09 Jan 2019 16:28:00 +0000https://www.allaboutadvertisinglaw.com/?p=5101Continue Reading]]>With the ink on the president’s signature barely dry, the commissioner of the U.S. Food and Drug Administration (FDA) – Dr. Scott Gottlieb – issued a statement letting everyone know that the agency is aware of the implications of the Agriculture Improvement Act of 2018 (a/k/a the Farm Bill). As we reported last month, CBD derived from hemp may not be “marijuana” any longer, but the laws that the FDA enforces continue to prohibit (at least, in the FDA’s view) the manufacture and distribution of foods and dietary supplements containing CBD. Dr. Gottlieb took this opportunity to reiterate the agency’s position, noting that “it’s unlawful under the [Federal Food, Drug and Cosmetic Act] to introduce food containing CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

The commissioner also indicated, however, that the agency will initiate a process for reexamining current policy, stating:

In addition, pathways remain available for the FDA to consider whether there are circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement. Although such products are generally prohibited to be introduced in interstate commerce, the FDA has authority to issue a regulation allowing the use of a pharmaceutical ingredient in a food or dietary supplement. We are taking new steps to evaluate whether we should pursue such a process. However, the FDA would only consider doing so if the agency were able to determine that all other requirements in the FD&C Act are met, including those required for food additives or new dietary ingredients.

Is significant change imminent? Although some have suggested that it is, we think the answer is hazy. Dr. Gottlieb’s statement noted only that the agency would hold a public meeting at which stakeholders could share their experiences and challenges with CBD-containing products. Neither a timetable nor any further actions were described. In the meantime, the FDA will continue to initiate enforcement actions based upon previously stated enforcement priorities. Any change in the near future seems unlikely.

What does this mean for banks and payment processors? Our previous recommendations still hold true. Confirm the legality of your customer’s business, conduct thorough due diligence in accordance with best practices followed for managing higher-risk customers, and maintain heightened monitoring requirements. For further details, please review our initial posting on the Farm Bill.

]]>New Farm Bill Cracks Open Door to Processing for Legalized Hemp and CBD Oilhttps://www.allaboutadvertisinglaw.com/2018/12/new-farm-bill-cracks-open-door-to-processing-for-legalized-hemp-and-cbd-oil.html
Fri, 21 Dec 2018 22:07:29 +0000https://www.allaboutadvertisinglaw.com/?p=5082Continue Reading]]>Signed into law on December 20, 2018, the 2018 Farm Bill may present a tremendous opportunity for banks and payments companies to provide banking, processing, and other services to the hemp industry. We expect a variety of companies to move swiftly in developing, marketing, and selling products (including CBD oil) that, until yesterday, were controlled substances. This means that banks and payment processors should be prepared for a flood of inquiries from the industry about opening bank, merchant processing, and other financial accounts.

While the Farm Bill “legalizes” hemp, there remain a number of open questions that financial institutions should consider before they start serving the industry. This article provides a brief overview of the Farm Bill’s impact on the legal status of hemp, highlights some of the open questions, and provides suggested best practices for banks and processors seeking to work with the hemp industry.

Summary of the Farm Bill’s Hemp Provisions

The 2018 Farm Bill mandates the creation of a new regulatory regime for the production and sale of hemp, and products made from hemp, which have been prohibited under federal law. The Controlled Substances Act (“CSA”) prohibits the possession, manufacture, and distribution of anything meeting the definition of “mari[j]uana.” Until yesterday, virtually all parts of the Cannabis sativa L. (“Cannabis”) plant, and anything containing a compound derived from the plant (but for a few limited exemptions), were deemed marijuana. The Farm Bill changes this by exempting hemp – including any part, extract, or derivative of the Cannabis plant with a delta-9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3 percent on a dry weight basis – from the definition of marijuana. For example, a CBD product that has been prohibited as “mari[j]uana” will no longer violate the CSA, if it meets the Farm Bill’s definition of hemp.

Where the Farm Bill legalizes hemp, it also sketches out a regulatory framework in new Subtitle G to the Agricultural Marketing Act of 1946 (7 U.S.C. § 1621 et seq.). Subtitle G sets forth a regulatory scheme by which states and Indian tribes may seek primary regulatory authority over hemp production in their territories by submitting monitoring and regulation plans to, and receiving approval from, the Secretary of Agriculture. And if they fail to do so, hemp production may proceed only under a federal regulatory scheme to be developed by the Secretary.

What Does this Mean for Banks and Payment Processors?

While the 2018 Farm Bill opens the door to lawful hemp production in the United States, there are a number of open questions that banks, processors, and other financial services providers should consider before they start serving the industry. Media and industry advocates have focused primarily on the fact that hemp has been legalized, but there has been relatively little commentary addressing the fact that hemp will be subject to robust regulatory oversight at both the federal and state levels. For banks and processors interested in this industry, understanding the nuances of this regulatory framework will be critical to providing banking and processing services in a safe and sound manner.

1. Is Hemp Production Legal Today?

As has been reported extensively in the media, the Farm Bill exempts hemp from the legal prohibitions that apply to marijuana. But what, exactly, does this mean? Is it lawful today for industry to manufacture and sell hemp products to consumers? While perhaps a bit academic, the answer is somewhat open to debate. Although growing hemp no longer violates the CSA, the Farm Bill also states that it is unlawful to produce hemp in any state or tribal territory that does not have a state or tribal plan in place or without a federal license. As of today, there are no federal, state, or tribal licenses or regulations in place. So what does this mean for the current legal status of hemp? The Farm Bill, unfortunately, does not address this apparent gap in the legislation.

2. What Will the Future Regulatory Framework Look Like?

The Farm Bill excludes hemp from the CSA definition of marijuana but also requires that the federal government, states, and Indian tribes work together to establish a robust regulatory process for licensing and overseeing the industry. At a minimum, the framework will need to address key issues such as the licensing of hemp producers, product testing, enforcement compliance procedures, and annual inspections. The Farm Bill, however, only sketches out the basic requirements for this framework – the adoption of federal, state, and tribal regulations will take time to develop and implement.

The current lack of a regulatory regime means that banks and processors that provide services to the industry will be doing so without a clear picture of federal and state expectations. This suggests that any financial institution dealing with hemp products should do so carefully and consistent with best practices for providing services to high-risk industries.

One option would be to treat hemp producers similar to marijuana-related businesses in states where marijuana has been legalized. While marijuana remains illegal at the federal level, the federal government (through the Financial Crimes Enforcement Network) and states have provided guidance and suggested best practices for financial institutions banking or providing services to marijuana-related companies.

Moreover, there remains a question as to how states will treat hemp. While the Farm Bill provides states and tribes the ability to regulate the product, or to rely on a federal framework, nothing in the Farm Bill prohibits a state or tribe from outlawing the production, sale, or use of hemp. Also open to speculation is what the final regulatory framework will look like, and how the federal, state, and tribal plans may differ. As such, any financial institution looking to work with a hemp or CBD company will need to be mindful of potential state or tribal limitations.

3. What About Imports of Hemp?

As noted, the new Subtitle G states that it is unlawful to produce hemp in any state or tribal territory that does not have a state or tribal plan in place or without a federal license. This seems to imply that imports of hemp may be lawful today, even if you take the position that production is not – at least until the Secretary of Agriculture promulgates regulations and begins issuing licenses, or until the states and tribes submit their own regulatory plans. This leaves a gray area that banks and processors will need to navigate if they decide to provide services to hemp businesses.

4. Is CBD Oil Legal?

The Farm Bill legalizes the production and sale of CBD oil derived from hemp. What the law does not address, however, is whether hemp is capable of producing commercially viable amounts of CBD. Under the CSA, the legality of products derived from marijuana (such as CBD oil) formerly turned on the part of the plant used to produce the product. Products made from the mature stalk and seeds were excluded from the CSA definition of marijuana (and were therefore lawful), while products made from the flowering tops, resin, and leaves are included (and were unlawful). The DEA has consistently taken the position that CBD can only be produced in commercial quantities from the unlawful parts of the plant. Yet with the new exclusion of hemp from the CSA, the old dichotomy no longer applies. Products made from any part of the plant are excluded from the definition of marijuana so long as the product is low-THC (i.e., 0.3% THC or less). Thus, it remains to be seen whether industry will be able to produce CBD from hemp in commercial quantities. We leave that question to the scientists.

Finally, there remain questions about how existing laws will be reconciled with the changes to the definition of hemp. New Subtitle G grants to the Secretary of Agriculture the sole authority to promulgate federal regulations on hemp production, but also states that nothing in Subtitle G affects or modifies the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), section 351 of the Public Health Service Act (42 U.S.C. § 262), or the authority of the Commissioner of Food and Drugs and the Secretary of Health and Human Services under their respective statutes. This means, for example, that the FDA’s current position that dietary supplements and foods containing CBD are unlawful will continue to be of concern to the CBD industry. Although some believe that the FDA’s position is vulnerable to a legal challenge, the specter of enforcement will remain until either the agency changes its position or someone successfully challenges the FDA in court.

Best Practices for Those Looking to Process Hemp-Related Payments

Despite these present uncertainties, we suspect that many hemp businesses will forge ahead, and that banks and payment processors will explore providing services to the industry. We therefore provide the following recommendations for offering payment processing services to hemp producers.

1. Confirm the Legality of Your Customer’s Business

Any bank or processor looking to board a hemp customer should start by confirming that the customer’s operations comply with applicable laws and regulations. This may seem like a no-brainer, but there remain some open questions about when and how hemp may be produced and sold. Our view is that regulators and law enforcement will expect banks and processors to do their homework before they start banking the industry. Moreover, as discussed, there are other laws and regulations that apply to products such as CBD oil. The Farm Bill does not supersede these laws, and a bank or processor should still be careful to avoid customers that engage in unlawful, deceptive, or fraudulent practices.

2. Best Practices for Managing Higher-Risk Customers

Even if a financial institution is comfortable that a potential customer’s hemp-related business is lawful, the financial institution may still decide to treat the customer as high-risk and subject to commensurate due diligence. In particular, federal and state regulators expect banks and processors to understand their customers’ business and to monitor their customers’ transactions for signs of unlawful activity.

With respect to due diligence for hemp customers, in addition to any standard due diligence for high-risk merchants, we recommend the following additional checks:

Does the producer have a license issued by a state, Indian tribe, or the federal government?

Has the producer ever been denied a license?

Has the producer ever been subject to any corrective action plan? If so, what were the violation(s) and remediation steps, and what is the current status?

Has the producer ever been subject to any period of ineligibility? If so, what were the circumstances and what is the current status?

Has the producer ever been convicted of a felony relating to a controlled substance under state or federal law?

Just as hemp producers should be treated as high-risk merchants at onboarding, they should be subject to heightened monitoring requirements throughout their tenure with the payment processor and/or acquirer. In addition to any standard monitoring conducted on high-risk merchants, we recommend the following additional checks:

Secure contractual requirement that merchant will notify processor and/or acquiring bank immediately upon receipt of notification of any violation from state, tribal, or federal licensing authorities or regulators.

Subscribe to any available law enforcement lists or databases regarding hemp production, including information on licensing status and documented violations.

* * * * *

Despite the present uncertainties, we expect some banks and payment processors will explore ways to provide banking, payment processing, and other services to the hemp and CBD oil industries. For those interested in this opportunity, it is important that they do so in a safe, sound, and responsible manner.

]]>Cell Cultured Food—FDA and USDA Reach Agreement on Splitting Up Oversighthttps://www.allaboutadvertisinglaw.com/2018/11/cell-cultured-food-fda-and-usda-reach-agreement-on-splitting-up-oversight.html
Wed, 28 Nov 2018 21:38:04 +0000https://www.allaboutadvertisinglaw.com/?p=5056Continue Reading]]>Previously on the blog, we noted that federal government agencies don’t always play well together. So, when these agencies synchronize their efforts, the industry would do well to take notice. One such coordination effort is well underway. The FDA and the USDA just announced that they will jointly oversee cell‑cultured food production derived from livestock and poultry.

The FDA and the USDA’s announcement follows the agencies’ October 2018 public meeting, where they met with consumers and members of the agricultural industry to discuss safety considerations, possible hazard controls, and labeling concerns related to cell‑cultured foods. Cell‑cultured food production is a burgeoning industry. It continues to raise questions about what will be regulated, what the regulatory process will look like, and which agencies will manage the regulatory process.

The joint‑regulatory framework proposed by the FDA and the USDA answers some of these questions. Under this framework, each agency’s authority follows the cell‑cultured food production process:

First, the FDA will oversee the earlier stages of the production—namely, processes related to cell collection, cell banks, and cell growth and differentiation.

Next, once the cells are ready for harvest, the FDA will hand the regulatory baton to the USDA.

Finally, the USDA will oversee both the final stages of production and product labeling.

Although this framework clarifies some issues, outstanding questions remain. Notably, seafood was not mentioned in the agencies’ announcement. Currently, the FDA regulates seafood. However, it remains unclear whether the USDA will assume authority over the final stages of cell‑cultured seafood production. The agencies’ announcement also fails to detail how cell‑cultured food will be labeled. Food labeling continues to raise difficult issues; labeling for cell‑cultured food only makes the issue more difficult. The agencies have yet to tackle the issue.

The agencies have acknowledged that they are continuing to refine the technical details of their framework. To aid in that process, the agencies have encouraged interested parties to participate in the public comment period. The public comment period ends on December 26, 2018.

Given the regulatory uncertainties inherent in cell‑cultured food production, industry participants should expect further attention from federal enforcement agencies. If you have questions about the information discussed in this blog post, the Venable Team is here to help guide you through these complex issues.

]]>FDA, CPSC & the Need for Speed: Recent Actions Highlight Importance of Promptly Reporting Product Safety Issueshttps://www.allaboutadvertisinglaw.com/2018/02/fda-cpsc-the-need-for-speed-recent-actions-highlight-importance-of-promptly-reporting-product-safety-issues.html
Wed, 07 Feb 2018 15:27:08 +0000https://www.allaboutadvertisinglaw.com/?p=4740Continue Reading]]>On consecutive days last month, both the Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA) made clear that delays in reporting potential product hazards or defects could significantly damage a company’s reputation and bottom line. The message from these agencies is clear—manufacturers and distributors of products regulated by CPSC and/or FDA would be wise to ensure their product quality processes and compliance programs enable swift communication to regulators and the public. On January 18, FDA Commissioner Scott Gottlieb announced the publication of a draft guidance that “better describes the FDA’s policy on public warning and notification of recalled products as part of [the agency’s] effort to ensure better, more timely information reaches consumers.” The next day, the U.S. Department of Justice announced that a federal district court awarded $5 million in civil penalties in an action brought on behalf of the CPSC against a pharmaceutical company for alleged violations of the Poison Prevention Packaging Act (PPPA) and Consumer Product Safety Act (CPSA), including its failure to “immediately” notify the CPSC once it discovered that its products were not compliant with the PPPA.

The FDA’s draft guidance applies to voluntary recalls of all products under FDA’s purview, including food, drugs, medical devices, and cosmetics. It comments on a variety of issues associated with product recalls, including whether the general public should be informed, and, if so, what the content and method for communication should be. With respect to timing, the draft guidance notes that the agency’s expectations will be driven largely by the nature of the risk presented by the individual recall, although it generally expects firms to issue a public warning within 24 hours of FDA notifying the firm that it believes a public warning is appropriate.

Notably, the draft guidance explains that FDA has the authority to issue its own public warning or to supplement a company’s communication, which it will exercise whenever deemed necessary, such as when the firm’s warning is not “prompt or effective.” Although the agency has long held this authority, the inclusion of this statement could signal a greater willingness to exercise it where companies fail to meet expectations. Although the reputational damage resulting from a public warning issued by the agency may be difficult to quantify, this is a significant “stick” that FDA appears increasingly willing to wield.

The damage to Dr. Reddy’s Laboratories, Inc. (Dr. Reddy’s) for alleged violations of the CPSA and the PPPA is more easily quantifiable. The consent decree, which included a $5 million civil penalty and compliance monitoring requirements, marks the conclusion of a nearly six-year investigation. This consent decree represents the first civil penalty against a drug company for allegedly knowingly distributing products in violation of the PPPA child-resistant packing regulations and for failing to notify the CPSC about the noncompliance.

The government’s complaint alleged that Dr. Reddy’s imported, manufactured, and distributed five household oral prescription drugs that were legally required to be in child-resistant packaging. Despite an internal report that noted the failure of this packaging to comply with CPSC rules, Dr. Reddy’s continued to manufacture and distribute the drugs in this noncompliant packaging—for several months—while concurrently developing compliant replacement packaging. The complaint cited the company not only for shipping products in violation of the rules, but also for failing to comply with the CPSA requirement to “immediately” (interpreted by regulation to mean “within 24 hours”) report to the CPSC information relating to a product’s failure to comply with the PPPA. Dr. Reddy’s allegedly waited almost fifteen months after publication of the internal report to notify the CPSC that its packaging was potentially noncompliant.

Taken together, the FDA draft guidance and the entry of the consent decree against Dr. Reddy’s underscore the importance of communication between companies and regulators, particularly where public health and safety are implicated. Agencies appear ready to use all their tools to deter delay, which should give pause to companies large and small. Whether your company is a large business with a bureaucracy requiring multiple approvals before a regulatory notice or press release can be issued or a smaller operation that may take longer to understand the potential hazard due to a lack of compliance procedures and policies, timely reporting is critically important.

Bureaucratic and unintentional delays are unlikely to be excused by regulators who believe that communication can help mitigate a risk to public safety. Companies would be wise to create and implement the appropriate reporting policies and compliance programs. But that is not enough. They also need to test their processes, which can be done through mock recalls, audits, and other exercises, to ensure that their systems enable the company to meet regulatory expectations. Their reputation ̶ and bottom line ̶ may depend on it.

]]>FDA Harshes the Vibe of CBD Makers, Warns Them to Stop Making Drug Claimshttps://www.allaboutadvertisinglaw.com/2017/12/fda-harshes-the-vibe-of-cbd-makers-warns-them-to-stop-making-drug-claims.html
Fri, 15 Dec 2017 00:04:55 +0000https://www.allaboutadvertisinglaw.com/?p=4684Continue Reading]]>While there are many questions surrounding the regulation of marijuana and related products, the FDA has made it clear where it stands on at least one issue. For the third year in a row, the FDA has issued a rash of warning letters to the makers of products containing cannabidiol (“CBD”) for marketing unapproved new drugs. CBD is a non-psychoactive compound derived from marijuana, which we’ve heard is used by many to treat symptoms including pain, anxiety, depression and insomnia.[1] The FDA letters assert that each of the companies’ claims regarding their CBD products cause them to be considered drugs, because they purport to be intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease and/or because they are intended to affect the structure or any function of the body. Such claims are a trap for the unwary because a sloppy marketer can inadvertently cause a relatively innocuous product to be subject to strict regulation as a drug. In this case, however, even a novice would conclude that the companies’ claims were disease related:

That’s Natural! claimed that CBD was beneficial for breast cancer, heart condition atherosclerosis, autism, and Alzheimer’s. It also claimed that several ingredients were “anti-tumor” and that “[s]cientific research by doctors have [sic] shown it actually kills cancer cells and provides a protective coating around our brain cells.”

Stanley Brothers published testimonials attesting to efficacy in treating cancer and depression, and linked to other websites that promoted CBD to treat Alzheimer’s, diabetes, leukemia, Parkinson’s, and strokes. Its social media made claims that its CBD products could treat autism and concussions.

Natural Alchemist claimed that its products combat tumor and cancer cells, were effective in “limiting neurological damage” following strokes and for treating neurodegenerative diseases like Alzheimer’s and Parkinson’s, and also had therapeutic benefits in treating arthritis, schizophrenia, diabetes, alcoholism, and cardiovascular disease.

Green Roads Health claimed that CBD could inhibit certain types of cancer and that it had potential in treating asthma, Alzheimer’s, arthritis, autism, and bipolar disorder.

Based on the healing properties claimed, the FDA considers the CBD products to be “new drugs,” which may not lawfully be sold in interstate commerce without FDA approval.

The FDA also warned the CBD makers that their products were considered “misbranded” because they lack adequate directions for their intended use. A drug is deemed to have “adequate directions for use” when they enable a layperson to use the drug safely and for its intended purpose. Prescription drugs, for example, require the direction and supervision of a licensed practitioner for their safe use. In the case of the CBD products, however, the marketing claims establish that the products are intended to treat diseases that “are not amenable to self-diagnosis or treatment” without a doctor. In other words, consumers cannot typically diagnose their own cancer or heart disease, and therefore no set of directions on a drug could permit a consumer to use that drug safely without the supervision of a licensed practitioner.

Each letter warns its recipient to take “prompt action” to remedy the violations identified or risk legal action, including seizure and injunction. The CBD makers were given 15 days to notify the FDA of the steps taken to correct the violations and measures introduced to prevent recurrence.

In prior years, the FDA went further and undertook testing of the CBD products. In many cases, those tests revealed that the products contained less than the claimed amount of CBD – adding a false and deceptive advertising component to the drug regulatory issues. The responses to those letters have been mixed. Based on our recent review, some recipients appear to have closed shop (or perhaps rebranded), while others altered their marketing messages to avoid making drug claims. Several others appear not to have heeded the FDA’s warning and continue to make problematic claims, attesting to their products’ efficacy in treating cancer, depression, pain, epilepsy and seizures, autism, anxiety, nausea, insomnia, Alzheimer’s, Parkinson’s, and brain and nerve damage caused by strokes.

]]>Will FDA Be Forced To Eat Menu Labeling?https://www.allaboutadvertisinglaw.com/2017/11/will-fda-be-forced-to-eat-menu-labeling.html
Thu, 09 Nov 2017 15:51:34 +0000https://www.allaboutadvertisinglaw.com/?p=4646Continue Reading]]>The Affordable Care Act (ACA) gave our nation “Obamacare.” The ACA also gave the FDA the obligation to adopt regulations requiring “a restaurant or similar retail food establishment that is part of a chain with 20 or more locations doing business under the same name” to disclose the calories contained in “standard menu” items. This largely ignored ACA requirement, except by the chain restaurant industry, has yet to be implemented. It may never be.

The public health premise of requiring calorie disclosure is that it will affect positively consumer choice. Consumers will, so the theory goes, be less likely to eat what is “bad” for them (or more likely to eat what is “good” for them) if they are told that a jelly donut with a dollop of whipped cream on top is so loaded with calories that eating it will far exceed one’s daily calorie requirements.

The public health need for trying to influence consumers (restaurant eaters) to choose lower calorie items is clear. FDA’s Commissioner Dr. Scott Gottlieb wrote recently that “more than a third of U.S. adults are obese.” The question is not the need, but the practical feasibility, of addressing obesity and related health issues through a national system of menu labeling.

The Congress which enacted the ACA’s menu labeling requirements presumably concluded that the task of implementing such a system was both worthwhile and doable. FDA did as directed and adopted the regulations; however, the regulations have yet to be implemented. The original compliance date for the regulations was December 1, 2015. That date, which has been delayed and extended several times, is now May 7, 2018.

On November 7, 2017, FDA published a draft guidance document to address the ongoing stream of industry concerns about how the agency proposes to implement and enforce the menu labeling requirements. As that document reflects, most concerns arise from the wide variety of settings in which Americans consume their restaurant calories, and the numerous ways, styles, and forms in which restaurants offer food for sale.

For example, the line between marketing materials and a “menu” is thin and easily open to interpretation. FDA’s guidance focuses on the “primary purpose” to distinguish between the two. If the material’s “primary purpose” is it to “entice” customers into the establishment, then, according to FDA’s guidance, it need not include calorie disclosures. This approach stumbles quickly. A menu facing outward on a restaurant window is intended “primarily” to “entice” and to offer specific food items for sale.

Chain restaurants now commonly allow customers to order food online as well as onsite. FDA’s position is that both locations require calorie disclosures. Restaurants must determine the calorie count of particular menu items. What is their burden to do so? FDA has said that laboratory analysis is not required (whew!) and, instead, that restaurants may rely on sources such as nutrient databases (e.g., http://ndb.nal.usda.gov/ndb/foods) and cookbooks (any cookbook?). Then, there is the “food” formerly known as alcohol. In FDA’s guidance, one learns that beers listed on the menu must be accompanied by calorie disclosures, while beers on tap and not listed on the menu are “foods on display” for which no disclosure is required. None of this is intuitive.

If and when restaurants are actually required to implement the menu labeling requirements and FDA brings enforcement actions against those the agency finds to be out of compliance, there is enormous potential for a regulatory and litigation morass. Menu labeling is a case study in the vast difference between the abstraction of a good idea – providing consumers information in the belief that doing so will lead them to make better choices – and the actual on-the-ground reality of implementing that good idea in a country which spans a continent with many thousands of eating establishments of many types and descriptions.

Implementing fairly enforceable uniform national rules to require that calorie information be disclosed to restaurant customers and to control how that information is conveyed is a fraught endeavor. Congress may well decide that imposing and enforcing national menu labeling requirements are out of sync with the nation’s present notable lack of enthusiasm for extending the reach of the national government. Do not be surprised if Congress directs FDA to abandon the effort.

]]>9th Circuit Delivers Sweet Victory to Soft Drink Advertisershttps://www.allaboutadvertisinglaw.com/2017/10/9th-circuit-delivers-sweet-victory-to-soft-drink-advertisers.html
Fri, 06 Oct 2017 19:27:10 +0000https://www.allaboutadvertisinglaw.com/?p=4597Continue Reading]]>San Francisco found itself in a sticky situation after the Ninth Circuit struck down a city ordinance that would have required soda companies and other makers of sugar-sweetened beverages to place the following warning on their ads:

WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.

Advertisers challenged the ordinance under the First Amendment and sought a preliminary injunction to halt its enforcement, but lost in the district court. The Ninth Circuit reversed, agreeing with advertisers that the ordinance unconstitutionally chilled their protected commercial speech because the warning was too one-sided and burdensome – constituting 20% of an ad’s space – and that advertisers were likely to discontinue advertising completely.

In order to pass constitutional muster, the Ninth Circuit ruled that San Francisco was required to show that the ordinance met three criteria:

it was “reasonably related to a government interest of sufficient [i.e., substantial] weight.”

The Ninth Circuit held that San Francisco’s sugar-sweetened beverage ordinance failed all three prongs. First, the court found that even if the warning were literally true (i.e., that sugary drinks do contribute to obesity, diabetes and cavities), that statement was incomplete and misleading to consumers, and therefore its factual accuracy was subject to dispute and controversy. The court found the warning incomplete because it attributed health maladies to the single act of consumption of sugary drinks, regardless of the quantity consumed or other lifestyle habits. The advertisers pointed to FDA statements that added sugars are “generally recognized as safe” and “can be part of a healthy dietary pattern when not consumed in excess amounts.” The court also found the warning misleading because it singled out sugary drinks, implying that they are unhealthier than other products with similar amounts of added sugar and calories, which the court found conflicts with FDA and American Dental Association statements.

Second, the court concluded that the warning imposed an “undue burden” on protected commercial speech because “the black box warning overwhelms other visual elements in the advertisement.” Even though the district court held that the remaining 80% of the ad was sufficient to engage in counter speech, the Ninth Circuit disagreed, finding that an advertiser’s need to devote space to a counter message would further shrink the space to communicate the originally intended message – the product advertisement itself. As a result, the court found the ads would devolve into “vehicle[s] for a debate about the health effects of sugar-sweetened beverages,” and advertisers would simply cease advertising.

Third, the Ninth Circuit ruled that San Francisco’s “substantial government interest in the health of its citizens” was insufficient to justify the imposition of a misleading warning that would chill protected commercial speech.

While the three judges on the Ninth Circuit were unanimous in their ruling, there was not universal agreement on the grounds for the decision. One of the three judges wrote that the court should have ruled solely on the basis that the required warning was too large, “without making the tenuous conclusion that the warning’s language is controversial and misleading.”

For now, the soft drink industry has avoided the fate of the tobacco industry. This fight seems far from over, and other governmental entities and private litigants are likely to continue to try and challenge soft drink advertising.

]]>Springtime for Food Marketers? Two Big Wins in California in Recent Dayshttps://www.allaboutadvertisinglaw.com/2017/04/springtime-for-food-marketers-two-big-wins-in-california-in-recent-days.html
Thu, 13 Apr 2017 13:58:50 +0000https://www.allaboutadvertisinglaw.com/?p=4354Continue Reading]]>The coming of spring has been accompanied by good news for two food marketers—ConAgra and Bumble Bee Foods—in their respective court fights in California.

In the Northern District of California, a federal judge dismissed a putative class action against ConAgra alleging that the marketer’s Crunch N’ Munch product violated California’s unfair competition law since it contains partially hydrogenated oil (PHO), a food additive high in trans-fat. The complaint, filed by Tony Walker, specifically stated, “although safe, low-cost, and commercially acceptable alternatives to PHO exist, including those used in competing brands and even in other ConAgra products, ConAgra unfairly elects not to use safe alternatives in Crunch ‘n Munch in order to increase its profits at the expense of the health of consumers.”

ConAgra argued that the plaintiff’s claims were preempted under federal law. The defendant pointed to the Consolidated Appropriations Act (CAA), federal legislation signed into law in December 2015, which mandates that no product containing PHOs be deemed unsafe or adulterated prior to June 18, 2018. The FDA, in June 2015, promulgated a final determination that PHOs are no longer considered Generally Recognized as Safe (GRAS). In its determination, the Agency gave food manufactures until June 18, 2018 to remove PHO from their products.

The judge, Judge Jeffrey S. White, found ConAgra’s preemption argument compelling. In granting ConAgra’s motion to dismiss, the judge said that defendants had “carried [the] burden” of demonstrating that the PHO claims were barred by conflict preemption. Further, he cited two recent PHO decisions from the Northern District reaching a similar disposition regarding preemption.

Bumble Bee Foods also received a favorable outcome in its bench trial in the Santa Clara Superior Court. Plaintiffs in this case had alleged that Bumble Bee Foods misled consumers by labeling its tuna products as an excellent source of omega 3-fatty acids and including an American Heart Association logo on the label without disclosing that the defendant had paid for the logo. This bench trial followed a denial of plaintiff’s motion for class certification in July 2016.

First, the judge, Judge Peter Kirwan, found that defendant’s use of the “excellent source” claim was not unlawful. Although the FDA had promulgated a proposed rule preventing claims such as “excellent source of omega 3-fatty acid” on food products, Bumble Bee Foods’s actions were not prohibited. Further, once the rule was finalized in April 2014, Bumble Bee ceased making the claims.

Second, Judge Kirwan, during the trial, suggested that defendant’s use of the American Heart Association logo would not necessarily be interpreted by consumers as an endorsement of the product. Although Bumble Bee Foods did not disclose that it paid to use the logo on its product, the judge believed that there was evidence that the American Heart Association does have criteria for use of their logo beyond simply paying a fee.

These dispositions are certainly positive for ConAgra, Bumble Bee Foods, and defendants facing similar claims in subsequent litigation. But only time can tell whether this season, and this year, will continue delivering good news for food marketers in the courtroom.